FEDERAL ELECTION TIME!!

With the federal election just around the corner, what are the tax and super policies of the major parties and how might you be affected?

THE MAJOR PARTIES GO HEAD TO HEAD:

Liberal-National Coalition

Superannuation

• Australians aged 65 and 66 will be able to make voluntary superannuation contributions without needing to work a minimum number of hours. Previously, this was only available to individuals below 65.
• Extending access to the bring-forward arrangements (the ability to make three years of post-tax contributions in a single year) to individuals aged 65 and 66.
• Increasing the age limit for individuals to receive spouse contributions from 69 to 74.

Taxation

• From 2018-19 taxpayers earning between $48,000 and $90,000 will receive $1,080 as a low and middle income tax offset. Individuals earning below $37,000 will receive a base amount of $255 with the offset increasing at a rate of 7.5 cents per dollar for those earning $37,000-$48,000 to a maximum offset of $1,080.
• Stage 1 tax cuts: From July 1 2018, increasing the top threshold of the 32.5% tax bracket from $87,000 to $90,000.
• Stage 2 tax cuts: From 1 July 2022, increasing the top threshold of the 19% personal income tax bracket from $41,000, to $45,000.
• Stage 3 tax cuts: From 1 July 2024, reducing the 32.5% marginal tax rate to 30% which applies from $120,000 to $200,000. The 37% tax bracket will be abolished.

Australian Labor Party

Superannuation

• Cash refunds of Franking Credits to be removed (with some exceptions). This will mainly affect individuals and SMSFs that don’t pay tax e.g. self-funded retirees
• Reduction in the non-concessional (after tax) super contribution cap from $100,000 to $75,000
• SMSFs will be banned from borrowing. Existing loans will be grandfathered (allowed to run their course).
• The income threshold for paying additional tax on contributions will be lowered from $250,000 to $200,000 meaning more individuals will be paying more tax.

Taxation

• Labor supports the stage 1 tax cuts and will match the $1,080 low and middle income tax offset. From 1 July 2018, individuals earning below $37,000, will get a $350 a year tax offset, with this amount increasing for those earning between $37,000- $48,000 to the maximum $1,080 offset.
• Introduction of a minimum 30% tax rate for discretionary trust distributions to people over the age of 18.
• Negative gearing will be limited to newly built housing from 1^st January 2020. (Existing investments will not be affected)
• Reduce the capital gains tax discount for assets that are held longer than 12 months from the current 50% to 25%. (Existing investments will remain at 50%)